Ryanair signals halt to aggressive growth

Ryanair has raised the prospect of halting more than two decades of dramatic
expansion, and instead giving money earmarked for new planes to shareholders
in the budget airline.

Ryanair said today that it may use its cash to pay money to shareholders rather than invest in new planes

8:08AM GMT 02 Nov 2009

Europe's biggest low-cost carrier said on Monday that talks with US aircraft maker Boeing to buy another 200 planes have made 'little progress' and that it would walk away from the discussions by the end of the year if a deal cannot be struck.

Failure to secure agreement with Boeing for the planes, which would be delivered between 2013 and 2016, will see Ryanair "change course before the end of this fiscal year and manage the airline over the next three years to maximise cash for distribution to our shareholders", the airline said in its first-half results statement.

The move would mark a significant change in strategy for the Dublin-based airline run by colourful chief executive Michael O'Leary.

Founded in 1985, Ryanair has expanded aggressively across Europe, managing to keep its air fares lower than many rivals through a combination of flying into less expensive airports and tight control on costs.

Mr O'Leary said today that he expects average fares to fall by 20pc in the second half of its financial year ticket prices are cut to attract customers in a 'grim' market.

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Despite this, Ryanair expects to deliver profits of between 200m euros and 300m euros for its full financial year.

The global recession has left the airline industry reeling as consumers cut back on trips and profitable business travellers also take to the air less frequently. Ryanair claimed today that it's winning market share from Europe's three big flag carriers: British Airways, Air France and Lufthansa.

The Irish airline, which employs about 7,000 people, reported that profits for the six months to the end of September, climbed to 419.4m euros from 105.2m euros in the same period last year. The results were buoyed by a 42pc drop in its fuel costs and flattered because the numbers from 2008 included a 93m euro hit from its investment in Aer Lingus.

However, while the number of passengers rose 15pc to 36.4m in the first half, revenue fell 3pc to 1.77bn euros.